Partnering with Payhawk, The Future of Business Finance

Payhawk’s Co-founders pictured left to right: Konstantin Djengozov (CFO), Hristo Borisov (CEO), and Boyko Karadzhov (CTO)

Lightspeed’s Growth Team is excited to announce our lead investment in . Payhawk is the operating system for finance teams, starting with the most comprehensive spend management platform in Europe.

Lightspeed led Payhawk’s Series B1 just three months after our friends at Greenoaks led the initial Series B. We were drawn to this category given the secular shifts in open banking and card issuing as well as the sheer dollars up for grabs in this massive greenfield market. But ultimately, betting on Payhawk was a bet on an exceptional team with a track record of breakneck execution. Hristo Borisov, Payhawk’s Cofounder and CEO, has a bias for action and rare breadth across product, GTM, and company design. We wanted you to hear directly from Hristo for a window into what drew us in:

AM: Why did you decide to build Payhawk?

HB: When we started the company in 2018, our goal was to find a category in B2B software that was still early but had strong potential to grow over the next 5 years. Our strategy was to bet on our skillset and experience to build enterprise systems and a great developer experience around them.

It dawned on us that business banking is nothing more than consumer products sold to businesses. Banks never evolved beyond basic money management. There was so much more potential to build a solution that had a full-blown banking experience in combination with enterprise features like accounts payable, reimbursements, net payroll, data extraction, workflows and so on. The current market solutions that combine expenses and company cards were just the tip of the iceberg. And it was a problem that any business from 5 employees to 5,000 experienced. The larger the company the more severe the problem was.

AM: What’s your vision with Payhawk? What promise do you hope to fulfill for your customers?

HB: Our vision is to become the most trusted solution for finance teams to help them manage payments and spend in every country in the world. We want Payhawk to promote a cultural change within finance departments making them far more business focused than compliance/transactionally focused. Long term, we see Payhawk as a business partnering tool as well as spend management. Systems like Payhawk yield a positive engagement between finance and non-finance stakeholders. Apart from the efficiency, cost-savings and automation that comes with a system like Payhawk, we improve trust and communication internally. It’s freedom within a framework. Businesses should focus on achieving their objectives, while Payhawk sits in the back and acts as the backbone.

AM: One of the reasons we invested was because your product is more powerful and flexible than any others on the market. Can you talk about what sets Payhawk apart?

HB: We didn’t want to cut any corners when setting up the foundation of the business. Most strategic decisions you make in fintech take years to realize. We wanted to have a full-blown neobank with dedicated accounts to customers, ability to receive money from anywhere, and to make payments to any business. We knew that if we get the fintech foundations right, then we can focus the game all around software. And this is where we know we can excel.

Once the financial services part was there, we could focus on bringing a lot of other products used by the finance department into a single system. We have OCR in 60 languages with our own semantical algorithms to extract all invoice data, dedicated IBAN across 30 countries, advanced workflows, enterprise connectors, spend policies, custom fields, single sign on capabilities and so on.

AM: How did you tactically build out a high velocity product development organization?

HB: When we raised our $115M Series B in November 2021, we only had 14 engineers. One of the secrets is that we always overstaff our PM and UX teams. We are extremely customer-centric and before we implement anything, we go through countless iterations both internally and externally with customers to make sure we are 100% confident with anything we deliver.

We also keep our engineering organization extremely flat. We have engineering pods of 3 people who operate as a unit. We also don’t hire DevOps and QAs. Every engineer at Payhawk is a full-stack developer who can feel comfortable with any part of the system — mobile, web, backend, automation, devops and so on.

We run our engineering organization in two streams: current and future. Future works on 3 months iterations with sprints, and pods working on the future stream are protected from daily issues. The pods working on the current streams work with a Kanban and do all the firefighting necessary to keep the system fully operational. Every 3–4 months, after a future pod delivers a big feature, they switch the stream to current, so that they can support it, while the previous team moves from current to future to work on the next big thing.

We have been growing 20% MoM for the last 18 months straight. So the load of the system and the number of issues that come can quickly distract any effort to deliver something meaningful as a new feature. That’s why we implemented this system, it’s all about priorities. With those two streams in place, we can always balance how much we want to invest into polishing the current system vs. investing in the future. We also invest a lot of time on metrics and data, so we have good leading indicators that tell us when we need to slow down the future and focus on the present and vice versa.

AM: What can customers expect on the product side this year?

HB: We are bringing a lot of features facilitating travel spend. With travel returning to its “new normal”, we see requests from customers on efficiently managing their trips and per diem. We are also working on a credit card, and a few secret things which we hope to release this year.

AM: You didn’t have to raise money, and you could have raised from any firm. Why did you choose Lightspeed?

HB: We like to complement and extend the wider team skill set. Lightspeed has plenty of experience with scale-up companies, and we really liked how you use data and think about the business. Also, it’s extremely important to have investors with whom we are well aligned on the market opportunity in front of us. During the interactions we got convinced that you are as excited about the market as we are, and you can provide a ton of value to us.

To be honest, our expectation with growth investors is that we don’t expect a lot of value beyond large checks, but you felt like a Seed/Series A investor who was willing to put a lot of effort into building and growing Payhawk. That was very rare and refreshing to see.

-Arsham Memarzadeh, Adrian Radu, Will Kohler

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